Should iShares Russell Top 200 Value ETF (IWX) Be on Your Investing Radar?

Zacks Equity Research
·4-min read

Launched on 09/22/2009, the iShares Russell Top 200 Value ETF (IWX) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $683.17 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.89%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 20.20% of the portfolio. Healthcare and Telecom round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 4.06% of total assets, followed by Johnson & Johnson (JNJ) and Jpmorgan Chase & Co (JPM).

The top 10 holdings account for about 25.57% of total assets under management.

Performance and Risk

IWX seeks to match the performance of the Russell Top 200 Value Index before fees and expenses. The Russell Top 200 Value Index is a style factor weighted index that measures the performance of the largest capitalization value sector of the U.S. equity market.

The ETF has lost about -9.69% so far this year and is down about -3.19% in the last one year (as of 09/18/2020). In the past 52-week period, it has traded between $38.08 and $59.28.

The ETF has a beta of 0.95 and standard deviation of 22.32% for the trailing three-year period, making it a medium risk choice in the space. With about 156 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Russell Top 200 Value ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, IWX is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $37.22 billion in assets, Vanguard Value ETF has $51.56 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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iShares Russell Top 200 Value ETF (IWX): ETF Research Reports
 
JPMorgan Chase Co. (JPM) : Free Stock Analysis Report
 
Johnson Johnson (JNJ) : Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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